Mergers: Commission clears the acquisition of VOO and Brutélé by Orange, subject to conditions

This article is brought to you in association with the European Commission.

The European Commission has approved, under the EU Merger Regulation, the proposed acquisition of VOO and Brutélé by Orange. The approval is conditional on full compliance with a commitments package offered by Orange. 

Today’s decision follows an in-depth investigation of the proposed acquisition of VOO and Brutélé by Orange. Orange is a provider of retail mobile and fixed telecommunication services in Belgium, based on its own mobile and third party fixed networks. VOO and Brutélé together are leading providers of retail fixed and mobile telecommunication services, based on their own fixed and third party mobile networks. Orange is the second biggest mobile provider in Belgium, while VOO and Brutélé together are the second biggest provider of fixed telecommunication services in the areas covered by their fixed networks.

The Commission’s investigation

During its in-depth investigation, the Commission gathered extensive information and received feedback from market participants and other stakeholders.

Following its investigation, the Commission had concerns that the transaction, as initially notified, would:

• Reduce the number of operators from three to two in areas covered by VOO and Brutélé’s own fixed networks thereby eliminating Orange as an innovative and significant competitive constraint;
• Significantly reduce competition in the markets where Orange, VOO and Brutélé are close competitors, in particular in the markets for the retail supply of (i) fixed internet access, (ii) audio-visual services, (iii) multiple-play bundles (including fixed-mobile convergent (‘FMC’) services) in the areas covered by VOO and Brutélé’s own fixed networks;
• Increase the likelihood of coordination on the affected retail markets between the remaining operators in areas covered by VOO and Brutélé’s own fixed networks.

The proposed remedies

To address the Commission’s competition concerns, Orange committed to provide to Telenet for at least 10 years access to:

• the exisiting fixed network infrastructure it is acquiring from VOO and Brutélé in the Walloon region and parts of Brussels, as well as
• Orange’s future fibre-to-the-Premises (‘FTTP’) network, which it plans to roll out in the coming years, which will make the commitments future proof.

Telenet, a subsidiary of Liberty Global, is one of the leading telecom operators in the North of Belgium. It is a reputable player with a proven track record on the fixed and mobile telecommuications markets. The conditions of access in the commitment pave the way for Telenet’s entry in the Walloon region and parts of Brussels in the immediate futureon the basis of these commitments.

The proposed commitments effectively replace Orange, an access seeker on the VOO and Brutélé networks in the Walloon region and parts of Brussels, by Telenet, which will be the new access seeker on those networks.

These commitments fully address the competition concerns identified by the Commission. The Commission therefore concluded that the proposed transaction, as modified by the commitments, would no longer raise competition concerns. The decision is conditional upon full compliance with the commitments.

A trustee, who has to be appointed by Orange, will monitor the implementation of the commitments and will report periodically to the Commission.

Companies and products

Orange is a French global telecommunications operator, active in Belgium as a provider of retail mobile telecom services on the basis of its own network. Orange also provides retail fixed telecom services in Belgium on the basis of the regulated wholesale access to third-party networks.

VOO is a Belgian cable operator active in the Walloon region of Belgium. VOO primarily provides retail fixed telecom services through its own cable network and retail mobile telecom services based on access to third-party mobile networks.

Brutélé is a Belgian cable operator active in parts of Brussels and certain municipalities in the Walloon region of Belgium. Brutélé provides retail fixed telecom services through its own cable network, which it markets together with VOO under the “VOO” brand.

Merger control and procedure

The Commission has the duty to assess mergers and acquisitions involving companies with a turnover above certain thresholds (see Article 1 of the Merger Regulation) and to prevent concentrations that would significantly impede effective competition in the Euroepan Economic Area or any substantial part of it.

The vast majority of notified mergers do not pose competition problems and are cleared after a routine review. From the moment a transaction is notified, the Commission generally has 25 working days to decide whether to grant approval (Phase I) or to start an in-depth investigation (Phase II). In addition to this transaction, there are currently eight on-going Phase II merger investigations: (i) the proposed acquisition of OMV Slovenija by MOL; (ii) the proposed acquisition of Alumetal by Hydro; (iii) the proposed acquisition of Activision Blizzard by Microsoft; (iv) the proposed acquisition of eTraveli by Booking; (v) the proposed acquisition of Lagardère by Vivendi,(vi) the proposed acquisition of VMware by Broadcom; (vii) the proposed acquisition of Inmarsat by Viasat; and (viii) the proposed acquisition of Asiana by Korean Air.

More information will be available on the Commission’s competition website, in the Commission’s public case register under the case number M.10663.